Flipkart's Ekart gets Rs 641 cr funding from group dirm Klick2Shop

This infusion comes as top ecommerce players in India are strengthening their logistics network to provide smooth delivery of the heavy load of shipments during the festive season.Varsha Bansal | ET Bureau | October 02, 2017, 07:48 IST

BENGALURU: Serious ecommerce players are strengthening the scaffolding on which their businesses operate — their logistics arms. The latest is online retailer Flipkart, whose Singapore-based group firm Klick2Shop Logistics Services International has infused Rs 641 crore into its logistics arm Ekart through an entity called Instakart Services Private Limited, according to regulatory filings with the Ministry of Corporate Affairs.

This infusion comes as top ecommerce players in India are strengthening their logistics network to provide smooth delivery of the heavy load of shipments during the festive season. Flipkart earlier pumped Rs 666 crore into its subsidiary Instakart Services 18 months ago.

While Flipkart did not respond to queries sent by ET at the time the story went to press, players and experts from the logistics space say 70% of Flipkart’s logistical needs are being fulfilled by Ekart, a number which is slowly inching towards 80%.

“I would expect that they would use these funds to set up and decentralise the warehouses following the goods and services tax (GST),” said a player in the logistics space.

“Another aspect would be to hire more people and set up last-mile delivery centres.” Experts believe all the top ecommerce players have been improving their logistics network over the last six months to enhance customer experience.

“Apart from setting up more fulfillment centres and last-mile delivery centres, they may also look at offering Ekart services to other companies,” said an analyst tracking this space. “They may also be expanding their network to include grocery services, which are expected to be launched by December at the earliest.”

Amazon India has been aggressively promoting its Prime service, which provides quicker deliveries to its members compared to non-Prime members. The company also has the largest number of fulfillment centres outside of the United States, according to an analyst.

On the other hand, Alibaba-backed Paytm Mall has invested approximately $35 million in its logistics network to boost same and next-day deliveries, which constitute 60% of the deliveries, the company claims. Flipkart had bought back its logistics arm Ekart in 2015 from WS Retail Services, the largest retailer on its platform.

The all-equity merger deal includes an exchange ratio of 4.39 HUL shares for each GSK Consumer India share, along with GSK entire operations of nutrition business and contract to distribute the latter's over-the-counter (OTC) and oral care brands such as Sensodyne, Eno and Crocin.